Market cap is the total value of an asset, calculated by multiplying its current price by the number of units or shares in circulation.
Market capitalization, or market cap, measures the total market value of a company or cryptocurrency. It is calculated by multiplying the current price by the circulating supply of shares or coins.
For example, if a coin trades at $2 and has 100 million coins in circulation, its market cap is $200 million. Market cap is often a better gauge of size than price alone, because a low price with a huge supply can still mean a large total valuation.
Investors use market cap to compare assets and gauge relative risk. Large-cap assets tend to be more established and less volatile, while small-cap assets can offer higher growth potential alongside greater risk.
For crypto, circulating supply excludes locked or not-yet-released tokens, which is why fully diluted valuation can differ significantly from market cap.
A token priced at $0.50 with 2 billion coins in circulation has a market cap of $1 billion. A different token priced at $50 but with only 5 million coins has a market cap of just $250 million, so the cheaper-looking coin is actually the far larger asset.
Not inherently. A higher market cap usually signals a larger, more established asset with lower volatility, while a smaller cap may offer more growth potential alongside greater risk. Which suits you depends on your goals and risk tolerance.
Price is the value of a single unit, while market cap multiplies that price by the total number of units in circulation. A low price with a huge supply can still add up to a very large market cap.
WalletLens is a free, private net-worth tracker that puts concepts like this into practice — it tracks your crypto, stocks, gold and cash in one dashboard, computing cost basis, P&L and allocation automatically with live prices. No account, and your data stays on your device.
Free net worth tracker · Blog · About · Home